Property Market Information: Constructive solution to housing woes

By the resi financial blog team, 12 March 2015

Whether you're buying a home or looking to purchase an investment property, a good supply of houses can make your search a bit easier. The ratio of supply to demand is key to the Australian property market at the moment. Without an encouraging number of new builds, prices can soar out of reach - something no first home buyer wants to see.

Fortunately, the latest building approval figures from the Australian Bureau of Statistics (ABS) have uncovered a solid stock of new homes in the pipeline. The figures show that the number of buildings approved has risen for the eighth month in a row, up 1.3 per cent in January. The total value of these builds also improved over the same period, rising 2.5 per cent.

Residential building is pushing these results along nicely, which will likely be music to the ears of buyers across the country. The ABS reported that the value of residential buildings approved climbed 3.3 per cent over January in trend terms. The Property Council of Australia's Executive Director of Residential, Nick Proud, highlighted that the strong number of approvals recorded in January pushed past the previous record set in December last year.

"We are witnessing record activity in building approvals, and this points to 2015 being a year of high activity in residential construction," he said.

There were 19,282 more dwellings approved in January, bringing the annualised total to a staggering 203,182. New South Wales recorded the best results for January with approval numbers up 4.3 per cent in trend terms over the month, but Victoria outstripped all other states by posting a 14.7 per cent rise over the previous 12 months.

However, industry commentators continue to point out that while building approvals bode well for the housing market, this needs to be translated into build starts. In fact, Sydney alone could see a housing deficit of around 190,000 by 2024 according to Property Council research, unless policy makers speed up the approval process. If governments can address the void between starts and approvals, the property market could see a sustainable number of new homes on the market.